The ING Groep NV (AMS:INGA) has disclosed that they will be shedding 7,000 jobs and reinvesting the saved money into the company’s digital platforms. This will help the business save $1 billion or 900 million Euros by 2021. ING Groep NV is the biggest financial services business in the Netherlands.
ING at this time has a workforce of 52,000. So this move is likely to affect about 12 percent of their workers.
Close to 1,000 of the workers who will lose their jobs are however with the company’s suppliers and not with ING directly. It was also learned that there will be 3,500 cuts in Belgium and 2,300 workforce reductions in the Netherlands.
Ralph Hamers, the Chief Executive wants to reduce costs and invest in the right areas, namely outside their home market, and lending to new customers. The bank also wants to combine risk control centers and technology platforms.
Digital Technology to Help ING Do Better
Almost the entire money (800 million euros) that is going to be saved will be invested in digital technology. Patrick Flynn, the Chief Financial Officer, said this while speaking to Bloomberg, “Unfortunately, digital transformation means fewer jobs. The Netherlands and Belgium need to rely less on bank branches”.
The ING Groep has been successful with this new model particularly in Germany. They conduct almost the entire business online in the country, managing to woo over many customers from the Deutsche Bank, and that too without having a lot of physical presence. The business is however, currently facing challenges in many other European markets, such as France, Austria, Italy, Czech Republic, and Spain.
Layoffs Across Europe
The ING Groep is not alone. Many others lenders are also slashing the number of their employees across Europe. In recent times, there have been mass layoffs at bank branches, as the businesses are trying to achieve better profitability. The number of branches has also been reduced with the focus shifting to online transactions.
Many of these banks have invested in financial technology to beat the competition from finance startups. Commerzbank AG (ETR:CBK) has plans of reducing their workforce by 9,600 by 2019. Their dividend payouts have also been stalled. Deutsche Bank too is working with labor representatives to shed 1,000 jobs in Germany. But that plan could be low in priority now, as the bank is in trouble. They will want to survive in the short-term first.